Contracts

1. The Contract is a business agreement between two parties which buy or sell goods or services. Contracts are concluded either between companies in one country or internationally, that is between companies from different countries.

The Contract has the following clauses or articles:

- Naming (definition) of the parties and their legal addresses.

- The subject of the Contract that is what goods or services will be bought or sold and the volume of delivery.

- Prices and the total value (amount) of the Contract including terms of delivery.

2. The price stated in the Contract may be firm, fixed or sliding. Firm prices can not be changed in the course of the Contract performance. Fixed price is the price in the market on the day of delivery or for a given period. Sliding prices can be for machinery and equipment which require a long period of delivery.

- Time (dates of delivery) is shown in the Contract too.

- Terms of delivery. The most usual terms of delivery are FOB, CIF, C & F.

- The Contract also specifies packing, marking and terms of payment.

3. Payment in foreign trade may be made in cash and on credit. The most widely used method is payment by letter of credit (L/C). The following types of L/C are usually used: irrevocable, confirmed, and revolving. An irrevocable L/C can not be modified or cancelled without the consent of the party in whose favour it has been opened. A confirmed L/C is an irrevocable L/C, payment under which is guaranteed by a first class bank. A revolving L/C is one under which its value is constantly made up to a given limit after payment for each shipment.

4. The Contract also includes terms of insurance (if any) and a force majeure clause. It usually includes natural disasters such as an earthquake, flood, fire, etc. which the parties can't control. It is also specified in the Contract in what ways disputes are solved. All the clauses of the Contract have numbers, and in the negotiations or correspondence one can refer to the specific clause or sub-clause.

The international Contract is usually written in two languages, one copy for each party.

Ответьте письменно на вопросы после текста.

1) What is the contract?

2) How may the payment be made in foreign trade?

3) What terms does the contract include?

3. Какие предложения являются верными?

1) Contracts are concluded either between companies in one country or internationally.

2) Firm prices can be changed in the course of the Contract performance.

3) Payment in foreign trade may be made in cash and on credit.

4) The international Contract is usually written in one language.